2021 (7) TMI 340 - HC - Indian Laws

Dishonor of Cheque - insufficiency of funds - failure to repay the money despite receiving demand notice - mechanical statement without verification of documents - HELD THAT - The impugned cheque for a sum of ₹ 2,00,000/- was issued by the accused in favour of the complainant which was presented by the complainant to his banker i.e. SBI for encashment and crediting the same in his account. The said cheque was sent to Tripura Gramin Bank from SBI for collection. But the cheque was bounced from the Tripura Gramin Bank on which it was drawn for insufficiency of fund in the account of the accused. It also stands proved that the complainant issued statutory demand notice to the accused which was received by him and despite receipt of the notice, the accused did not pay the loan of the said amount of ₹ 2,00,000/- to the complainant. Eventually the complainant lodged the complaint in the court of the CJM at Udaipur. It is true that the complainant could not produce the impugned cheque at the trial. But his failure in presenting the cheque before the court does not affect his case because the Branch Manager of SBI at Udaipur branch had categorically stated in his evidence that the said cheque was missing from the custody of the bank which was also reported to the jurisdictional police station and the information was recorded in the General Diary of the police station. The accused could not impeach the evidence of the PW in this regard and there is no reason to doubt the statement of the Branch Manager, SBI PW-3 . The plea of the accused is not at all probable. The complainant on the other hand has been able to prove the essential facts by adducing consistent evidence. The complainant proved that accused borrowed a sum of ₹ 2 lakhs form him and to discharge his debts, he issued the impugned cheque to the complainant which was dishonoured by the bank - In the instant case, apparently the accused petitioner did not lead any evidence in rebuttal of such statutory presumptions. He has also failed to bring on record such facts and circumstances which would lead the courts below to believe that the liability, attributed to the accused petitioner was improbable or doubtful. The impugned judgment is set aside and judgment and order of the trial court convicting the accused petitioner for having committed offence punishable under Section 138 NI Act is restored - Sentence is reduced to fine of ₹ 2,25,000/- only and in default to SI for 2 months. The criminal revision petition stands disposed of.

Summary

Issues Involved:
1. Whether the cheque was issued by the accused in discharge of his debt and liability.
2. Whether the cheque was dishonored due to insufficient funds.
3. Whether the accused failed to repay the money despite receiving the demand notice.

Issue-wise Detailed Analysis:

1. Issuance of Cheque in Discharge of Debt and Liability:
The trial court framed charges against the accused for issuing a cheque to discharge his debt and liability. The complainant alleged that the accused borrowed ?2 lakhs and issued a cheque to secure the debt. The trial court found that the cheque was indeed issued by the accused for discharging his debt, as per Sections 138 and 139 of the NI Act, which presume the existence of debt or liability once the cheque is issued. The complainant's evidence, including the testimony of bank officials and documentary evidence, supported this claim. The accused's defense that the cheque was issued as a blank cheque without any debt was not substantiated by any evidence.

2. Dishonor of Cheque due to Insufficient Funds:
The trial court found that the cheque was dishonored due to insufficient funds in the accused's account. This was corroborated by the bank officials' testimonies and the bank's return memo. The appellate court, however, questioned the sufficiency of evidence proving the return of the dishonored cheque. The appellate court emphasized that proving the return of the dishonored cheque is crucial under Section 138 of the NI Act. The High Court, upon re-evaluation, upheld the trial court's finding, noting that the bank's memo and testimonies sufficiently established the dishonor of the cheque due to insufficient funds.

3. Failure to Repay Despite Demand Notice:
The trial court found that the accused failed to repay the amount despite receiving a demand notice. The complainant issued the statutory demand notice, which was confirmed by the postal inspector's testimony and the delivery slip. The accused admitted to receiving the notice but did not repay the money. The appellate court did not dispute this finding. The High Court reaffirmed that the accused's failure to repay despite receiving the demand notice was proven beyond doubt.

High Court's Final Judgment:
The High Court, after hearing both parties and re-evaluating the evidence, concluded that the appellate court erred in setting aside the trial court's judgment. The High Court emphasized the statutory presumptions under Sections 138 and 139 of the NI Act, which place the burden on the accused to rebut the presumption of debt or liability. The High Court found that the accused failed to rebut this presumption effectively. Consequently, the High Court restored the trial court's conviction but modified the sentence, reducing it to a fine of ?2,25,000 with a default sentence of two months' simple imprisonment.

Conclusion:
The High Court upheld the trial court's findings that the accused issued the cheque in discharge of his debt, the cheque was dishonored due to insufficient funds, and the accused failed to repay the amount despite receiving the demand notice. The appellate court's decision to set aside the conviction was overturned, and the trial court's judgment was restored with a modified sentence.